Does Big Apple Bagels have the discretion to apply payments from the franchisee to any past due indebtedness?

According to Big Apple Bagels' 2025 Franchise Disclosure Document, Big Apple Bagels has the authority to allocate a franchisee's payments towards any outstanding debts. This encompasses royalty fees, marketing fund contributions, purchases made from Big Apple Bagels or its affiliates, as well as any interest or other forms of debt owed to Big Apple Bagels or its affiliates. This discretion is granted to Big Apple Bagels irrespective of any specific designation made by the franchisee regarding the payment's intended application.

This provision offers significant protection to Big Apple Bagels, ensuring that past due amounts are addressed promptly. It also means that a franchisee cannot earmark payments for specific purposes if they have existing overdue balances. Big Apple Bagels retains control over how payments are applied, which could impact a franchisee's financial planning and cash flow management.

For a prospective Big Apple Bagels franchisee, this underscores the importance of maintaining timely payments to avoid accumulating past due indebtedness. Franchisees should be aware that Big Apple Bagels can direct their payments to cover older debts first, potentially leaving current obligations unpaid and subject to further interest or penalties. This clause is fairly standard in franchise agreements, as it protects the franchisor's financial interests and ensures compliance with payment obligations.